The Logistics Organizations in China and the Development of the Logistics Industry - Essay Example

The subprime crisis has had an enormous effect on the global financial markets. It has also affected the Chinese economy. China's economy has been faced with many difficulties which include global slowdown, the undulation of the oil price, pressure of RMB appreciation, and inflation. The subprime crisis has been particularly cruel to the Chinese economy. The logistics industry in China is still at the beginning. Although it is developing fast, it has many problems. The outdated management styles, obsolete information technology and haphazard planning of capital construction in the national transportation system, and so on restrict the development of the logistics industry in China.

However foreign competitors pay attention to this potential market because their existing operational capabilities elsewhere can be effectively utilized in China. Flynn (2006) argues that foreign logistics companies entering the Chinese market, especially after WTO accession, brought tremendous pressure to bear on the local companies. This situation forces them to improve their technology and reformulate their strategy. At the same time, the Chinese government recognizes the significance of the logistics industry to China's continuing economic prosperity.

Millar (2006), for instance, has shown that the Chinese government has seen logistics as a strategic imperative. Gradual deregulation combined with immense investment in the transportation infrastructure to improve the logistics development is an inevitable outcome of this desire. However foreign competitors pay attention to this potential market because their existing operational capabilities elsewhere can be effectively utilized in China. Flynn (2006) argues that foreign logistics companies entering the Chinese market, especially after WTO accession, brought tremendous pressure to bear on the local companies.

This situation forces them to improve their technology and reformulate their strategy. At the same time, the Chinese government recognizes the significance of the logistics industry to China's continuing economic prosperity. Millar (2006), for instance, has shown that the Chinese government has seen logistics as a strategic imperative. Gradual deregulation combined with immense investment in the transportation infrastructure to improve the logistics development is an inevitable outcome of this desire.